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New York Times Co. Case Solution

Solution Id Length Case Author Case Publisher
1361 750 Words (2 Pages) Belen Villalonga, Chris Hartman Harvard Business School : 207113
This solution includes: A Word File A Word File

The ownership structure that has allowed the control of the family has a dual structures shares Class A and Class B shares. The class A shares will be sold on the AMEX and as per rules of the exchange will have voting rights. Class B shares will not be publically traded and will remain in the family with The Ochs Trust and Sulzberger’s. To preserve the control Class A shareholders will have a right to elect only 3 of the nine members on board. The arrangement was later altered to give Class A shareholder to elect 30% of the board of director's. On January 14, NYT’s class a stock got listed on AMEX at $42 per share.

The problems that led the family Chief to implement this structure were that there was the dearth of cash for the company and to make big purchases the company needed to go public the executives also supported Punch because they thought the company will benefit from this. Apart from that, there was no formal way to transfer shares to the following generations.

Following questions are answered in this case study solution

  1. Analyze the ownership construction that allows the family to control the New York Times. Beyond the desire to control NYT, which potential problems have led the family chief(s) to implement this ownership structure?

  2. Evaluate the arguments behind MSIM's claim and the dilemma it raises for the family behind the New York Times.

  3. How should the family behind the New York Times respond to the MSIMs proposal?

Case Analysis for New York Times Co.

2. Evaluate the arguments behind MSIM's claim and the dilemma it raises for the family behind the New York Times.

One of the largest shareholders of having a stake of 5.6% in NYT the Morgan Stanley Investment Management (MSIM) managed by Hassan Elmasry. In a meeting with Securities and Exchange Commission, MSIM called for eliminating the dual class structure that did not favor the public. The statement pinpointed that that the dual class structure creates special privileges and responsibilities that the board and management of NYT have failed to fulfill. The dual class structure was designed to protect editorial independence and integrity of news franchise now promotes a lack of accountability.

In a statement the fund manager Elmasry said that The New York is a matchless news franchise and has an excellent potential in the long run. Although it is time now for the company’s board to combine Class A and Class B common stock into a single class of common stock which will provide equal rights, voting power and representation to all shareholders. It will also assure that the company’s holders can hold the board and management accountable for company’s performance. Declassifying the share structure will encourage a culture of accountability benefiting the shareholders including Class B shareholders improving financial and operational performance and closing the gap between market price and intrinsic value.

The dilemma is that Arthur Sulzberger Jr. is confused about his duty to his shareholders as chairman of NYT and his commitment to the Times publisher to maintain the superior quality of the journal for the readers and his responsibility to preserve the Times free of ulterior influence unselfishly devoted to public welfare.

3. How should the family behind the New York Times respond to the MSIMs proposal?

MSIM has proposed urging NYT to decide the dual-class structure based on a vote, to separate the jobs of chairman and the times publisher, requiring the chairman to be an independent director and to put a majority of independent directors on the board’s compensation committee. When MSIM was continuously pressing to the NYT times to the board hired a lawyer Martin Lipton to evaluate the company’s practices. Lipton said that the dual- class structures are often found in family-controlled media companies e.g.

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